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Social Gaming Summit: In-Depth On The State Of Social Gaming

Social Gaming Summit: In-Depth On The State Of Social Gaming Exclusive

June 23, 2009 | By Christian Nutt, Staff

June 23, 2009 | By Christian Nutt, Staff
More: Console/PC, Exclusive

Social gaming is in a rapid phase of growth and upheaval, with a variety of platforms and companies competing for significance.

The first panel at the 2009 Social Gaming Summit in San Francisco featured several notable figures in the arena: Sebastian de Halleux, COO of developer Playfish; John Pleasants, new CEO of Playdom; and Mark Pincus, CEO of Zynga; with Jeremy Liew, managing director of Lightspeed Venture Partners, moderating.

These companies all have hugely successful Facebook applications -- but Liew pointed out that newcomer Farm Town has hit the big time seemingly out of nowhere, and is approaching 10 million users: "Three months ago you guys were clearly the three biggest social gaming entities but then Farm Town came out of nowhere." The rapidity of the shift highlights the volatility of the platform for even its "biggest" players.

Not A Zero-Sum Game

So is the market hit-driven, as in the console game space? Not according to Pincus.

"There are more things about social gaming that are different than similar," he said. "I think the number one thing we should keep in mind that this is new... The console business is mature and not really expanding, so for your game to win, another one has to lose."

When Pincus said Zynga "welcomes" newcomers to the market, as it helps expand audiences, Liew retorted, "I think you guys welcomed Farm Town with FarmVille, yesterday," referring to Zynga's own casual farming game -- and drawing big laughs from the audience.

An Open Market

De Halleux sees the market as inherently superior to the console game space, because distribution is not controlled by consoles or by publishers. "Quality drives distribution because it's up to the users," he said.

But Playfish's philosophy is more nuanced than spamming out games to entire friends lists. "We generally disagree with cross-promotion of an existing install base being important," he said. Even so, the company's Restaurant City hit five million users in five weeks.

How? "We [want to] ensure that only people who are deeply engaged with the content invite their friends," explained de Halleux. There's no automatic spam; users have to choose to invite their pals because they like the game: "It goes against common sense."

According to de Halleux, "each [Playfish game] attracts a slightly different audience" -- which he considers key to the company's business model. Matching the right audience to the right game allows Playfish to flourish.

To Pleasants, "a lot of the attractiveness is not the game itself... but how it interacts," which brought the discussion back to the social element key to the conference and the genre.

To that end, Pincus believes platform support is the crucial element for growth. "We think that iPhone and other smart phones represent a really important platform for social gaming, because it's going to make social gaming accessible to a lot of people who would never get it," he said. "We've made a big commitment to iPhone and mobile far ahead of the business opportunity."

Liew thinks, however, that the current state of the Apple app store works counter to the natural growth of social gaming on platforms like Facebook: "I think this is a really important difference between social and iPhone games... It's a lot more like retail because there can only be top 25 games on the shelf."

Pincus suggests that a concerted effort from developers might change things. "If we all went and talked to Apple, or to Palm, and we all tried to put out what we think are the best requirements to an open social gaming network," there could be a meaningful change.

But that's of less concern to de Halleux. "I would like to make a distinction between 'device' and 'platform,'" he offered. "For us, the next-generation platform is Facebook. The iPhone is a nice device."

"Our new application [interfaces with] Facebook and is really the same game with the same scoring," he continued. It's worth noting that the Facebook Connect API, of which more in later panel discussions, allows Facebook friends to interact via iPhone apps (and will also drive the solutions debuting on Nintendo DSi and Xbox 360 later in the year).

The Greenlighting Process

Figuring out which games to make can be vastly different processes, even at two of the most successful companies. Zynga takes a marketing-driven approach; Playfish concentrates on design.

Said Pincus of his firm's process, "We look at success metrics around virality and retention before we launch." The company, according to Pincus, spent $2 million developing a game called Guild of Heroes, but never launched it because "it didn't drive the right metrics."

De Halleux contrasted that with his company's approach: "The idea is that games are not a science. Building a successful game is something you cannot model. We keep our studio teams quite small and separate from each other and give them full creative freedom."

He addresses the fact that the word "viral" has become all-consuming in the dialogue about social networking. "The core metric I hear a lot of people talk about 'virality.' The Playfish approach is to focus on something quite different, which is fun," he argued. "This puts game design as the core metric of game distribution.

"We're trying to push the boundaries... We try to create a title that goes after a specific niche and see how the niche responds. The most exciting thing about this space is that there's no middleman and you can engage with your audience directly." 

Said de Halleux, "Creating a game is about creating a product or service that creates emotions. When we put a new product together we try and create these emotions. Suddenly by involving your friends creates another spectrum of emotions, that are fed between two individuals." On that front, he gave credit to Nintendo's Wii.

Old-School Influence

De Halleux sees board games, rather than video games, as the model for social gaming. "It's one thing to be beaten by a random guy on the internet; it's another to be beaten by your little sister," he pointed out. When playing board games, "You never remember the strategy that made the night, but you remember the social interaction.

"Most of our users have never played a video game in their life," he continued. "When they talk about our games, they do not talk about them as games. They talk about them as a social experience they had with their friends."

The Nature Of Social Gaming

To find its audience, Zynga looks to fill the gap of boredom with what social networks offer intrinsically. Pincus explained, "People get fatigued on the news feeds and they want another experience they can share with their friends."

Social games have three core tenets, said Pincus: They "have to have a feeling of playing with your friends; they have to give you a way to express yourself... a playground for personalities; [and they] have to give players an opportunity to invest in the game over time and a sense they own something of value."

Social capital, the meaningfulness of interactions building towards something greater, is what sets social gaming apart, according to Pincus: "If we all double down on social capital I think that social gaming can become a cultural phenomenon."

He pointed out that the proportion of people playing any casual or social games on any platform has not reached the proportion of people using social networking -- but he thinks it can.

New Revenue Sources

An interesting statistic that de Halleux shared is that the company sold 20 million virtual Christmas trees at a theoretical value of $2 each last holiday season -- though many were bought with currency earned through attention rather than real money transactions (many online and social games offer both forms).

This surprised Playfish, so it went to its users. "Previously, Christmas trees, we'd put in our flats and it'd be something to share," explained de Halleux. Now, "we've become disconnected, and maybe three or four friends would see the real Christmas tree -- on Facebook, all of their friends would see it."

Pincus noted that, in the past, people wouldn't spend on the internet. But as free time becomes more valuable, "people are shifting from economic value to time value." They'll pay, because the games offer interaction with people they know.

"Now you're playing a game, and you manage to touch some friends, maybe in a more meaningful way." This serves two purposes -- "keeping the plate spinning" on personal relationships, as well as providing entertainment.

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